A school bus in Wisconsin drives behind a logging truck. The truck loses its logs, which fall across the road and hit the school bus. Children on the bus are injured. The school bus insurance company pays half a million dollars.

A motorcoach in Idaho drives down a rural road at night on Christmas Eve. As it turns a corner, another vehicle that had rear-ended a tractor-trailer earlier is in the middle of the road, its perished driver still inside. The bus brakes and barely bumps the vehicle. That motorcoach carrier pays $2.5 million due to being involved.

A school bus driver on the East Coast runs into the back of a tractor-trailer. The driver and a second grader die. The company’s owner is filled with grief about the loss of a beloved driver and a passenger perishing under their watch. His insurance goes from half a million to $2 million due to the tragedy. The company, with 250 buses, can’t bear the financial burden on top of the emotional one — not to mention post-COVID driver shortages and other rising operational costs. After three months, it shutters its doors, sells the fleet, and ends all contracts.

All of these are real stories.

Across the country, there are similar stories.

Insurance Rates Climb for Yellow Buses

As a result of stories like the ones above, insurance costs rise. Premiums for school bus coverage are now up to twice as high as they were pre-COVID. 

In fact, there have been 25 consecutive quarters of premium increases, according to Tim Weaverling, partner and VP of school transportation, RWR Insurance. That’s one quarter shy of six years.

But it’s not just the burden of each one involved in an accident or incident — all school bus operators are feeling the squeeze. Because the more it happens, the higher the risk profile becomes for everyone.

“No one's safe from the adversity of this market right now,” Weaverling said. 

“Double-digit increases over the past few years have and will continue to eat into our resources that we use for wage increases and asset replacement,” Shane Johnson, COO of Palmer Bus Service in Minnesota, said. “In some cases, we have been able to get one-time contract increases to help offset some of the growing premium costs. Most of the increases have gone right to our bottom line with no hope of trying to recover it until a future contract.”

Bethany Bertram, president of Trobec’s Bus in Minnesota, said she’s seen insurance premiums jump 15% to 30% in a single year. “That’s not sustainable,” she said. “We end up absorbing the difference, which takes a toll on wages, equipment upgrades, and our ability to grow or retain staff.”

Why the Rise?

The school bus, which is one of the safest and most regulated vehicles on the road, is now viewed as high risk by insurance carriers, even in cases where the driver or employer was in no way at fault. 

“The core issue seems to stem from a growing litigious culture, combined with tort laws that allow for large settlements,” Bertram said. “Even if a case is dropped or settled, legal defense costs are high. Pupil transporters are seen as high-risk, not because of poor safety records, but because of the high emotional and legal stakes anytime children are involved.”

“As an industry responsible for the safety of children, we understand and accept the high standards we’re held to,” she added, “but the cost of defending even frivolous claims is skyrocketing, and that cost gets passed directly to us through insurance premiums.”

The financial burden is exacerbated by the fact that most school bus contracts increase by only 1% to 3% annually, far below the 15% to 30% insurance hikes being reported.

Compound Problems

Due to the now-volatile nature of the school bus on the road, some insurance carriers have pulled out entirely when it comes to offering coverage to school buses. This puts an extra burden on those that continue to cover the industry.

The carriers that stuck around raised their rates and/or decreased their amount of coverage because of the now-higher risk.

“Now companies want at least three years driving a like vehicle,” Weaverling said, referring to school buses being classified as similar. “Well, that makes it hard when there's a driver shortage.” 

Weaverling shared a recent conversation he had with a carrier who was skeptical of offering a quote because the customer had its own entry-level driver training (ELDT) program. Other times, they want a medical certificate for anyone over the age of 70.

“They’re starting to really scrutinize,” he said. “But you can't discriminate by age, so they just say ‘experienced drivers.’ So it's either inexperienced drivers are a problem or experienced drivers are a problem. When you can't get through those obstacles, you're forced to a company that is going to have an even higher rate because they're more risk-averse.”

The other disappointing problem with tort payouts is how little can go to those who were injured.

Plaintiff attorneys often take 30% to 40% (plus expenses) of the damage award if the plaintiff wins. If third-party litigation financing is involved to help fund the lawsuit or support the plaintiff with living and/or medical expenses, third-party litigation funders will be paid out of the damage award the amount that was funded at an exorbitant interest rate.

Similarly, medical providers may have a lien on the cost of medical treatment, which will be paid from the damages awarded. Due to factors such as attorney contingency fees, litigation expenses, medical liens, and third-party litigation financing terms, this may leave the plaintiff with a net recovery that is less than the contingency fees and liens themselves. Meaning the injured often don’t receive much.

The Call for Tort Reform

As insurance rates continue to rise, the cost of doing business also increases. In an era where other costs are rising yet budgets are tightening, there is a fear that it may mean school bus service decreases and/or users turn to alternative options. 

Quite simply, the higher cost of transportation may take students off the bus and into less safe options, while owner-operators could go out of business.

Enter tort reform and a way to protect school bus operators from being buried in unfair lawsuits, while making sure that real victims get help when needed.

Pamela Bracher, deputy general counsel for the American Trucking Associations (ATA), explained that there was significant tort reform in the 1990s and early 2000s, though some of that has been eroded due to state court rulings that have struck down the legislation (often on constitutional grounds), state court judicial discretion and interpretation of broad or vague statutory provisions, or subsequent legislative amendments to the enacted reforms.

“But,” she said, “those reforms still created headwinds for plaintiff attorneys, resulting in a concerted effort on their part to change their trial practices, such as the effective use of unfettered jury anchoring, along with the outside influence of social inflation, increased plaintiff bar specialization, and increases in the volume of plaintiff attorney advertising, which caused settlements and verdicts in trucking cases to accelerate in size starting around 2010.”

For Bracher, the purpose of tort reform is to bring balance and fairness back to the courtroom.

What We’ve Learned from Trucking

The heavy-duty trucking industry has long been involved in lawsuits and nuclear verdicts. For a brief history and overview of what’s been going on there, check out this article on the “war on trucking” from our sister brand HDT.

The ATA has been heavily involved in advocating for lawsuit abuse reform at the federal and state level. In the 117^th Congress, the Highway Accident Fairness Act was introduced and sought to protect trucking companies from the financial burdens of defending against or settling fraudulent insurance claims resulting from staged collisions, among other provisions. 

Unfortunately, the bill did not receive a vote and did not pass, with the same outcome when it was reintroduced in 2023 in the 118^th Congress. In the current Congress, as it pertains to lawsuit abuse reform, the ATA is supporting the Litigation Transparency Act (HR 1109), the Tackling Predatory Litigation Funding Act (HR 3512), and the Staged Accident Fraud Prevention Act (HR 2662).

State trucking associations have had a powerful voice in the enactment of reforms in 15 states. For more information about those reform laws, check out the State of Play section of the ATA’s Lawsuit Abuse Resource Hub.

A State’s Issue

Despite much desire for federal tort reform, nothing has quite caught on… yet. 

Instead, because tort law is a function of state law, and varies, tort reform is put on each state. And that means 50 different reform initiatives. 

Some states have pursued reform initiatives, enacting legislation to limit damages, shorten the statute of limitations, and/or require disclosure of third-party financing arrangements. Fifteen states have enacted reform bills between 2020 and 2025. The most significant movement has been in the South, in states like Texas, Florida, Georgia, Louisiana, and South Carolina.

In Georgia, the 2025 legislative session passed SBs 68 and 69, limiting liability in certain negligence cases, restricting damages for medical bills, preventing unfettered jury anchoring, and requiring disclosure of third-party litigation funding arrangements. Gov. Kemp signed SB 68 and 69 into law on April 21, 2025.

Our neighbors to the north in Canada have also seen some success with tort reform, including caps on payouts for pain and suffering or bodily injury.

Where it hasn’t yet caught on is in states where more contractors are present, Weaverling pointed out, like the East and Midwest.

Some states are even known as hotspots for litigation. The website JudicialHellholes.org puts Philadelphia, New York City, Georgia, California, Chicago, St. Louis, and Louisiana in its top 10 list for lawsuit abuse.

Generally, “The more urban, the more litigious,” Weaverling said. “The judicial systems there lean heavily toward plaintiff verdicts.”

But, Bracher noted that some of the larger verdicts now come from politically conservative, less urban areas where there is a correlation with the economic health of the area. “I think there has been a shift, especially as populism has grown,” she said.

What About School Districts?

While districts can and do face lawsuits too, they are less common. One reason is because of the statute of limitations and some level of tort immunity granted to government entities. 

But that doesn’t mean contractors are the only ones at risk. School districts using contractors can also be on the hook. 

Case in point: Minneapolis Public Schools (MPS) was added to a wrongful death lawsuit this summer after a pedestrian was dragged through a crosswalk and died two years prior. There, a contractor was working with MPS, and the bus company employed the driver. In that case, the driver was not certified and had been flagged at least 20 times for risky behavior, according to a Fox9 report.

"I think [MPS] carry the same responsibility," case defense attorney Roger Poehls told the outlet. "If you contract with somebody else, you can’t contract away your liability." 

And in Orange County, California, the district reached a $10 million settlement for the families of five children injured after their school bus driver didn’t disclose a medical condition and passed out at the wheel.

What School Bus Operators Can Do

The examples above illustrate the importance of staying on top of drivers’ certifications, records, training, and not allowing unsafe drivers to continue to be behind the wheel, even during a driver shortage. 

Personal injury attorneys look for driver error in the form of skipped inspections or fatigue, plus negligent maintenance, mechanical failures, and road conditions when taking on a case. Don’t overlook the importance of regular, preventive maintenance, and consider defensive driving training to enhance drivers’ confidence in handling various road conditions.

Weaverling suggests working closely with your insurer on strategies to mitigate risk and control loss, because they want you to succeed, too.

RWR’s account managers will sit with customers throughout the year to discuss what they can do to help, look for trends in types of accidents or claims, and suggest actions to take. 

“You know actuarially what the predictive model tells you it should be based on market conditions, territory, state, based on all these factors,” Weaverling said. “It’s spitting a number out to you. Then you as an underwriter have the ability to ride with that or make an adjustment. And that's where we have to make a difference.”

In a recent NSTA podcast, Spencer Schiefelbein, director of channel development at REI, suggested asking your insurance agent how adding AI technologies to your buses could affect your rate. “When I talk to different insurance companies, they are not discounting rates for these products,” he said. But, “they may not increase rates as much if you have this kind of equipment on your vehicle. It’s worth asking those questions from an expense standpoint. The savings is well beyond the cost.”

Similarly, Weaverling said the best steps pupil transporters can take to protect themselves is to know their data. “It’s almost a must now to have cameras on the bus,” he said. “It ends up protecting the driver and the insured as much as it protects the children on board.”

Driver monitoring technology that allows for driver report cards is invaluable, Weaverling said. Catching risky behaviors like running stop signs, speeding, or distracted driving can become learning tools and make safer drivers. 

These tools can also report on how behaviors change when students are on the bus versus when the driver is alone. Some drivers may take more risks when the bus is empty, but that doesn’t mean their risk is lowered.

“Through the implementation of cameras on every bus and GPS tracking ability, we are able to mitigate false accusations and prevent lawsuits from even starting,” Johnson said. “Insurance claims have also been reduced where false claims have been attempted to be made, as factual evidence can now be provided to set the stage and stop lawsuits.”

Weaverling has crafted back-to-school training to show teams the impact of their losses to their bottom line. To get driver buy-in, outline what opportunities are missed because of that. “So we say, ‘we had $100,000 in claim activity this year that's being paid out, it's had this effect on our rates, that's lowered our margin, and now that reduces our ability to buy new equipment for you, to do safe driver incentives, to put new machines in the break room.’ These are real hit-home things for drivers because they want all that stuff.”

And finally, get involved in advocating for tort reform. “As an industry, we need to get louder on this,” Bertram said. “The current legal climate punishes companies that are doing the right thing, and that discourages people from entering or staying in this vital profession. If we don’t address this issue, we’ll continue to lose good operators and good drivers.”

For those wanting to get involved, Bracher references the work of industry trade associations like the ATA and NSTA, as well as the U.S. Chamber of Commerce, American Tort Reform Association, and Lawyers for Civil Justice. 

On the state level, budget shortfalls and balancing all the bills introduced are often the reason tort reform is not prioritized, but remember that you can and should have a voice when it comes to your representatives. 

To learn more about this topic, listen to this episode of the NSTA podcast with Weaverling, and watch this NSTA webinar replay: